NEW ZEALAND Trends and Developments Contributed by: Shane Campbell and Thomas Westaway, Campbell Westaway
major New Zealand corporates bear civil liability for their greenhouse gas emissions, survived a strike-out challenge in the Supreme Court and were directed toward a fifteen-week trial commencing April 2027. Funding has been central to the proceedings’ viability throughout. In 2025, Mr Smith sought a protected costs order to shield a prospective charitable funder from adverse costs exposure should the proceedings fail, after potential funders had been materially deterred by the defendants’ indication that they would seek costs against any funder. That concern had precedent: an Australian charitable funder of climate litigation had been ordered to pay indemnity costs after an unsuc- cessful proceeding, an outcome widely regarded as having chilled charitable funding of public interest environmental litigation across the region. The High Court was sympathetic to the access to jus- tice concern underlying the application. It nonethe- less declined. Without knowing the proposed funder’s identity and specific circumstances, it could neither assess whether the funder qualified as a pure funder nor afford defendants the transparency to which they were entitled regarding the nature and scale of the case they faced. At the time of writing, the proceedings’ trajectory has shifted materially. In May 2026, the government announced its intention to amend the Climate Change Response Act 2002 to prevent findings of tort liability for climate change damage caused by greenhouse gas emissions, applying to both current and future proceedings. If enacted, the announcement would bring the Smith proceedings to a close without a determination on the merits. This latest development sits outside the parameters of the court-made frame- work entirely, a form of parliamentary engagement with funded litigation that the market has not previ- ously encountered in this jurisdiction. Pressure Points The jurisprudence since Saunders is permissive where funding promotes access to justice and restrained where it risks abuse. Built through incremental case law rather than statutory design, its contours have
become more visible as the market matures and the cases it produces grow in scale and complexity. New Zealand is distinctive among comparable com- mon law jurisdictions in having neither abolished nor significantly reformed the torts of maintenance and champerty by statute. England and Wales abolished them in 1967. Most Australian states have followed. In New Zealand they remain on the books, creating background uncertainty that affects funder appetite and the pricing of arrangements, with associated costs borne by plaintiffs. Security for costs applications present a further struc- tural friction. Courts have consistently treated funders as parties standing to benefit from successful litiga- tion and required them to contribute to adverse costs risk. Security for costs is almost invariably ordered in funded representative proceedings, and funders price that exposure into commission rates. The Law Com- mission concluded in 2022 that assessing whether the resulting arrangements remain fair to class members requires statutory intervention, a determination the courts have not been positioned to make on their own. The unresolved position on aggregate damages, as Gielen illustrates, adds a further layer of commercial uncertainty. Defendants cannot reliably quantify their exposure. Funders cannot price it with confidence. Further litigation will provide incremental clarification, but it is the kind of question a clear statutory rule would resolve more efficiently. These pressure points define the gap between what the New Rules have established as New Zealand’s procedural aspiration and what the funding market can currently deliver. Courts have repeatedly identified the statutory tools required to close it; Parliament has yet to provide them in that form. The Reform Agenda The framework’s pressure points have not gone unnoticed. The Law Commission’s 2022 report made 121 recommendations addressed to class action procedure and litigation funding regulation. The pro- ceedings of the past two years give its prescriptions renewed force.
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